Thursday, February 12, 2009

Arbitration may not make the grade in Scotland as legal profession touts for business

While some feel the proposals on arbitration by the Scottish Government may make a difference in disputes, many within the legal profession warn that problems may arise later on which require court action that could have settled the case in the first place … not !

Lets give arbitration a chance .. but who among the professions will actually abide by such arbitration when the experience has always been to deny everything ….

ARBITRATION in Scotland has a long and honourable history. Going back as far as the mediaeval Scottish Parliament, the notion that men of business should submit their disagreements to "amicable arbitration", rather than troubling the courts, was respectable and well established, at home and abroad.

Since the 1707 Union, parliament has rarely seen fit to regulate this process in Scotland, apart from the introduction of a form of appeal to the court in 1972.

The Chartered Institute of Arbitrators (CIArb) welcomes enthusiastically the Scottish Government's commitment to the reform of this area of law by its introduction of the Arbitration (Scotland) Bill 2009.

In The Scotsman last week, Fergus Ewing, the community safety minister, outlined the many benefits of this proposed legislation. The CIArb and most practitioners have long held the view that Scots arbitration law had become a sad mixture of antiquated case law and piecemeal statute – incomplete, unworkable and often difficult to find.

Scottish arbitration has fallen out of step with modern practice around the world. This bill, drafted by officials in the Justice Department, in consultation with CIArb and others, puts Scotland at the cutting edge of this process in the modern world. It will make access to arbitration in Scotland much easier, not just for large businesses but, importantly, for individuals and SMEs.

In today's harsh economic climate, many small businesses painfully write off debts and disputes because they believe they cannot risk or afford to go to court. This bill will lift some of that pressure.

In parallel with the new bill, CIArb will prepare a set of accessible short-form arbitration rules that will be of immediate use to small and medium-sized businesses and to consumers, offering significant potential for rapid, low-cost dispute resolution in a binding form.

Arbitration under the bill will give users a potentially much less expensive, quicker and more accessible route to civil justice. For example, arbitrators with relevant expertise arbitrate certain travel, house-building, telecoms and motor trade disputes quickly and efficiently.

In practice this could mean dispute resolution becoming a more user-friendly process: for example in a hypothetical case concerning a dispute over a house extension, the arbitration could easily be held in a shirtsleeve environment around the kitchen table of the house, a far cry from the wigs and gowns of a courtroom.

The bill will radically improve the arbitration process at all levels, through the introduction of a clear and transparent structure, firmly based in relevant, modern legislation. When it becomes law, it could save millions by reducing legal expenses and cutting the pressure on our overstretched court system.

Importantly, the bill has been carefully drafted with an eye to the market for international arbitration (estimated to be worth about £250 million a year in London alone).

It not only incorporates the best ideas from around the world, but also builds upon Scotland's worldwide reputation as a centre of judicial and legal excellence.

The CIArb, with approximately 12,000 members in more than 100 legal jurisdictions, is uniquely positioned to help develop the bill and to make it work when the Scottish Parliament enacts it.

In addition, I believe that, in time, this legislation will enable Scotland to develop a dispute resolution centre that will attract international and domestic cases.

My colleagues and I consider this bill to be a landmark piece of legislation, very important in our economic history. I am delighted that the Government has found parliamentary time to introduce such an important measure, and that it has attracted such strong cross party support.

In his article, the minister has set CIArb, and other relevant professional bodies a challenge: to realise the full potential of this bill for the benefit of the people, the business and the economy of Scotland.

That is a challenge that we welcome and gladly accept. Properly managed, the bill should make arbitration the dispute resolution process of choice at all levels.

• John Campbell QC, is president of the Chartered Institute of Arbitrators.